Health Care For America Now

It's amazing what happens when it looks like you have the votes to pass a bill. Suddenly your enemies are your best friends!

Republicans of all stripes are coming out of the woodwork to give Democrats free advice on how to vote on health reform. Most of that advice says vote no, of course.

To take a definitive example, here's John Boehner and Mitch McConnell in the Wall Street Journal:

A little over a year ago, when President Obama first took up health-care reform, Republicans reached out to him in the hopes of working together on solutions that would lower health-care costs for families and small businesses. A bipartisan bill focused on lower costs could have been sent to the president's desk last year, and it would have received the support of the American people.

This is coming from the same John Boehner who, back in June, before the legislation's basic shape had been set, couldn't find a Republican yes vote for health reform. And the same Mitch McConnell that kept a deal out of the one place a (bad) bipartisan deal might have occurred - the "gang of six."

Mike Madden in Salon points out a few other glaring examples and states the obvious:

"From the day this passes, if it should, there will be an instant spontaneous campaign to repeal it all across the country," Sen. Lamar Alexander, R-Tenn., the third-ranking GOP Senate leader, told CBS News' "Face the Nation" on Sunday. "It will define every Democratic congressional race in November, and it will be a political wipeout for the Democratic Party." Alexander isn't the only one warning Democrats about their future; the entire Senate GOP leadership is getting into the act. "House Democrats will have to decide whether they want to trust the Senate to fix their political problems," Senate Minority Leader Mitch McConnell, R-Ky., told reporters last week. "I think their problems are just beginning," Sen. Jon Kyl, R-Ariz., said at a different briefing last week. Karl Rove, whose master plan for the 2006 midterm elections didn't exactly help the Bush White House, weighed in on Fox News Channel's "Fox News Sunday." " [President Obama] passes this thing, I think they lose the House of Representatives this fall," Rove said. Even Republican National Committee chairman Michael Steele is offering advice to Democrats. "Looking at the reconciliation fight that may loom ahead of us, it certainly will have represented a 'death panel' for the Democrats this fall," he said last month (bringing that extra rhetorical zest that only Steele can).

Of course, it should go without saying that when Republicans start chirping up with unsolicited suggestions for how Democrats can improve their political fortunes, Democrats would be wise to consider the source. The GOP isn't interested in helping Democrats avoid defeat this fall. This is so obvious that even typing it is hard to do without laughing, but just in case, here goes: Republicans want Democrats to lose in November's elections, early and often, if possible.

The reality of public opinion on health reform is very different from what Republicans make it out to be. Americans are closely divided on the bills in Congress, and support greatly improves when they learn what's in the bill.

As Speaker of the House Nancy Pelosi told me yesterday:

If we don't' pass the bill, how do you explain that to Americans? There is incredibly urgency in cost and the health and well-being of American, and yet we as Democrats, with two Houses [of Congress] and White House, couldn't make the historic decision to go forward?

The same forces that are aligned against Medicare are against this bill. This is what what they believe. I'll give them credit for staying true to their beliefs - they don't believe in health care for all Americans and a government role in that. The budget that they have [Rep. Paul Ryan's budget] privatizes social security, offers vouchers instead of medicare, and gives block grants to states instead of Medicaid. That is what they believe.

We want to take it to the American people and say, "This is the choice you have. This is their vision, and this is ours." [The Democratic members of the House] are strong enough and courageous enough to take that message out there.

Republicans have no intention of easing up on any Democrat that votes against health reform. Instead, Democrats need to confront the Republican opposition head on. Republicans still have no plan to make good health care available and affordable to the American people, while overwhelming majorities of Americans want large changes to our health care system.

Democrats should keep that in mind before heeding their "advice."

Last night on the PBS Newshour, AHIP - the insurance industry's main lobby group - debated for the first time someone who's for health care reform, Health Care for America Now's National Campaign Director Richard Kirsch.

The topic? The insurance industry's profits. AHIP continued to insist its profits were only a "small piece of the pie" when it comes to health care costs, and to deflect blame elsewhere. As you can see, the arguments were demolished. Check out the video:

Fact is, insurance companies are making record profits while the rest of the country is working its way out of the recession. They are increasing their rates two and a half times faster than medical inflation. And all the while they're cutting millions of people from their rolls. Put simply, they are gouging the customers they do have, and dropping the ones they can't make a profit on.

Meanwhile, the industry is spending over a million per day through the U.S. Chamber of Commerce on ads to kill reform. And every single one of those dollars came from those seemingly unimportant profits.

The insurance industry is pushing their latest lie, claiming that only 1 cent of every dollar spent on health care goes to profits:

Insurers have responded to the administration’s campaign against recent rate hikes by blaming increasing health care costs, provider cost increases and adverse selection (healthier Americans are dropping coverage) for their premium increases. To hear them tell it, the insurance industry is a low-profit industry that spends just one cent of every premium dollar on administration and strives to reduce costs by encouraging efficiencies. Insurers “do not deserve to be vilified for political purposes,” Robert Zirkelbach, a spokesman for America’s Health Insurance Plans (AHIP) told the AP:

For every dollar spent on health care in America, less than one penny goes toward health plan profits. The focus needs to be on the other 99 cents.

Never mind that even if it were true that one penny adds up to $25 billion per year - a quarter of the cost of health reform over 10 years. But the claim is highly misleading:

Zirkelbach is clever enough to compare the private insurance industry’s administrative spending to national health care expenditures — 45 percent of which includes spending in Medicare, Medicaid and other public programs. In the context of total spending, insurers administrative costs may look small, but compared to the revenues of private insurers, administrative spending is seen as far more substantial. Insurers skim off 15-20 percent of premium dollars for administrative costs and profits which fund TV ad campaigns, Washington lobbyists, lavish company retreats and outlandish CEO salaries.

Recent reports by Health Care for America Now bear out this analysis. Today, the insurance industry is making record profits, and it's increasing its rates twice as fast than the underlying cost of medical care. There's no other interpretation to be had - insurers are squeezing more money from their customers while dropping their most expensive patients.

Another reason the insurance industry's excuse that their profits shouldn't be the "focus" doesn't hold water? They just launched ad campaigns spending over $1 million per day to try and kill health care reform to protect their profits - profits which are apparently so small as to be unworthy of scrutiny.

Yesterday, Ezra Klein got a hold of an exclusive report by Cowen and Co., a Wall Street investment bank. Their stock analysts concluded what we've know all along. From the report:

"Of course, healthcare reform is a double-edged sword for Wellpoint shares. Should reform fail, Wellpoint would be a primary beneficiary."

This analysis tracks closely with what Goldman Sachs told the rest of the insurance industry back in November:

A study put together by Goldman in mid-October looks at the estimated stock performance of the private insurance industry under four variations of reform legislation. The study focused on the five biggest insurers whose shares are traded on Wall Street: Aetna, UnitedHealth, WellPoint, CIGNA and Humana.

…What the firm sees as the best path forward for the private insurance industry's bottom line is, to be blunt, inaction.

The study's authors advise that if no reform is passed, earnings per share would grow an estimated ten percent from 2010 through 2019, and the value of the stock would rise an estimated 59 percent during that time period.

And Goldman-affiliated analysts implicitly endorsed this view on a recent conference call for investors by saying the insurance industry's business model going forward was going to be about cutting customers and making more profits as the industry keeps consolidating:

The market concentration for health insurance is so monopolized in some areas that insurance companies are willing to raise prices and lose customers in an effort to improve their bottom line, a leading insurance broker told Wall Street analysts on Wednesday.

In a conference call organized by Goldman Sachs Global Investment Research, Steve Lewis, a highly regarded broker at the financial consulting firm Willis, painted a picture of the health insurance market in which consumers seem likely to be priced out of coverage.

Noting that "price competition" between insurers was "down from a year ago," Lewis relayed that "incumbent carriers seem more willing than ever to walk away from existing business."

The best thing for the insurance industry, according to Wall Street analysts, is business as usual. It will allow insurers to keep consolidating their monopolies, keep pricing sick customers out of the market, and thus keep increasing their already record profits.

And the insurance industry clearly believes the analysis - they laundered between $10 and $20 million through the Chamber of Commerce for misleading attack ads designed to kill reform. And their army lobbyists, which cost millions per day, certainly aren't telling lawmakers to pass a bill.

The people, on the other hand, not only need a health reform bill, but they need the right one. And there's a way to get it done.

Reconciliation is gathering steam in the Senate. 47 Senators are on board or very open to the idea, and enough others have indicated openness to bring the tally above 50. And the package of fixes done through reconciliation needs to include measures to make health care more affordable for everyone and hold insurance companies accountable.

Congress needs to understand that not passing a bill is giving the insurance companies exactly what they want and dooming their constituents to more denials of care, more medical bankruptcies, and more deaths because people can't afford insurance. Congress needs to listen to us instead and pass something that works for the American people.

The insurance companies have been taking an incredible amount of heat lately for their stunning rate increases. Anthem kicked things off with their 39% increases in California, but these were not isolated hikes. WellPoint, Anthem's parent company, is increasing rates by double digits in at least 11 states. And other big insurance companies are hiking rates in at least half a dozen more states.

Insurance company CEOs have been called to testify before Congress, with more hearings to come. This has put the industry on the defensive and they've taken to the media to deflect criticism and explain their rate hikes. Their spin centers on one talking point, elucidated by Angela Braly, CEO of WellPoint, in today's Wall Street Journal:

WellPoint Inc. Chief Executive Angela Braly is facing her biggest test yet as the nation's largest health insurer comes under fire for its plans to raise rates as much as 39% in California.

So far, Ms. Braly has chosen to fight back. Instead of issuing a Toyota-style apology, she is turning her critics' argument around, citing rising health-care costs driven by doctors and hospitals, which she says aren't addressed by current health-overhaul bills.

The strategy, on display last week during a contentious House hearing focused on the rate increase, could get another airing Wednesday, when Ms. Braly and other top health-insurance executives are expected to appear before the Obama administration's top health official to discuss health-care premiums.

The idea that insurance rate hikes are driven by increases in the underlying cost of medical care has also been pushed by AHIP, the insurance industry's top lobbying front group.

Given the health insurance industry's duplicity on everything having to do with the health care system and their role in it, it shouldn't surprise anyone to find out that this talking point is a straight up lie.

A new report from Health Care for America Now sets the facts straight [pdf]. As Richard Kirsch, National Campaign Director, explained to reporters on a call today:

From 2000 to 2008, insurance premiums went up 97% for families and 90% for individuals. In the same time period, payments to providers like hospitals and doctors only went up 72%. Even worse, underlying medical inflation, calculated from the Consumer Price Index, went up only 39%.

In short, over the last eight years premiums almost doubled, but medical inflation went up only 40%. Premiums rose two times faster, and over three times faster than wages, which only rose 29% in the same time period.

The graph below shows the percentage increases in various health and economic indicators, including health insurance rates for families and individuals, the amount the insurance companies spend on care, doctors, and hospitals, and underlying medical inflation. As you can clearly see, the rate at which insurance companies increased their prices outstrips the amount they pay in benefits:

So while it's true the cost of medical care is rising faster than inflation, and it's also true doctors and hospitals are making more profit than they used to (the difference between medical inflation and what insurance companies pay to doctors), insurance companies are raising their rates much faster than even that - over 20% faster than the amount they are paying doctors and two times the amount the underlying cost of care is rising.

To put it another way, insurance companies are making more profit than ever (and they are making record profits) because they are raising their prices faster than their costs.

Which means they have more money to spend on perks. For example, Anthem spent $27 million on 103 executive retreats to places like Hawaii in 2007 and 2008 alone. In fact according to the report, from 2000 to 2008 insurance companies spent $716.4 billion of premium dollars on administrative costs, CEO salaries, and investor profit, almost enough to pay for the entire health reform bill.

Why are insurance companies raising their prices so much faster than the underlying cost of care? As Wendell Potter explained today on the call, it's to please Wall Street:

Insurance companies are accountable first and foremost to their shareholders and they will do whatever they can to meet their expectations and the expectations of a few powerful financial analysts.

Angela Braley [WellPoint's CEO] is not alone in making promises to Wall Street [when she told investors WellPoint wouldn't "sacrifice profitability for membership]. On their conference calls with investors, all the executives of other companies make the same promise - profitable growth. That's what investors want to hear.

The bottom line is that these companies are constantly raising their rates and dropping the customers they don't want in a process called "purging." The consequence is small businesses can't afford to pay exhorbitant rates and group coverage is dropped. When people are purged, they then have to seek insurance on the individual market. Many of these people have medical conditions so they can't get coverage at any price because insurance companies won't sell it to them. Those that can buy find insurance discover it's more expensive on the individual market and they get hit with shocking rate increases every year.

These rate increases are all part of the insurance industry's plan to squeeze more profit out of your premium dollars.

Rates go up for small business. (Blue Shield, for example, is raising its rates by over 75% in some cases.) Small business drops coverage. And then people have to seek insurance on the individual market where insurance make more profit because they can deny coverage or raise their rates with impunity because individuals have a harder time fighting back.

This is why it's so important to get health reform done and get it done right.

The individual market needs standards and regulations and small business needs protection, that's what the Exchange is for.

It would set minimum benefit standards so insurance companies can't sell junk insurance. It would have to approve rate increases, especially if President Obama's proposal for a rate overseer is included. And, with the inclusion of a public option, it would set up a system where insurers would have to compete for customers in a real way, instead of competing to steal each other's healthy and profitable customers as they do now, like "thugs and thieves" as Wendell Potter put it. And the government would be able to step in a provide subsidies so everyone could afford insurance.

The underlying cost of medical care is not driving insurance rate hikes. Greed is the singular driving factor at work. And our health care system must be reformed to fix this glaring, deadly problem.

UPDATE

The insurance companies have fired back, taking issue with the data used to determine the rate at which health insurance rates have climbed. To determine these rate increases, the report used data from the Kaiser Family Foundation, the gold standard for this type of information going back many years. It goes without saying that we stand by the data and the report's conclusion.

Every time someone makes a serious threat to rein in the insurance companies and their record-breaking profits, the insurance companies turn around and threaten America.

We saw it with the public option, with insurers saying as far back as a year and a half ago that a public health insurance option competing with private insurance would drive them out of businesses and thus take away the health care millions of Americans rely on.

And we saw this again when, of all things, the bill the Finance Committee passed, with the insurance industry releasing a much-discredited report essentially threatening to raise rates if health reform passed.

And now, with the President's proposal of a central rate authority to examine and stop outrageous rate increases of up to 39% like we've seen recently in California and a bunch of other states, the insurers are once again threatening America with poverty and sickness:

A plan released Monday by the White House would give the federal government the power to regulate health insurers like a public utility. The Health and Human Services Department — in conjunction with state authorities — would be able to deny substantial premium increases, limit them or demand rebates for consumers.

But the Blue Cross and Blue Shield Association warned against separating premium reviews from those that state regulators conduct to make certain health insurers have enough money to pay claims. Such a separation could lead to "multi-plan insolvencies," the association said in a statement.

"That means claims do not get paid," spokesman Jeff Smokler said.

BMO Capital Markets analyst Dave Shove, who follows the insurance industry, said he doubts a federal rate review would push health plans into insolvency. But he said many details remain to be resolved, and a federal regulator might motivate insurers to stop selling individual policies in some markets.

Now remember, insurance companies made record profits last year. The insurance industry is basically saying, "Give us our profits, or else!"

Compare that to what will happen if reform passes and passes right. In just one aspect, a new report from Health Care for America Now estimates states will receive billions in new money to help expand health care coverage to millions, and this will result in the states spending $85 billion less on health care because the federal government will be helping them out so much more. This will free up state funds for things like jobs and roads and schools, also desperately needed in this country.

As of today, Republicans have yet to present a plan they'll bring to the summit on Thursday. They're aiding the insurance companies, who want to be able to continue to threaten our lives and livelihood.

It's crucial we finish health reform right. We need to give to the people the power to hold these insurance companies in check and force them to compete. They can't be allowed to threaten us anymore.

As we move towards the President's health care summit on the 25th, two stories in today's news are worth highlighting.

Republicans are constantly holding up Health Savings Accounts as a solution to our health care crisis. Most recently, Newt Gingrich and John Goodman in the Wall Street Journal and Senator Judd Gregg and Representative Bill Cassidy all touted HSAs.

Of course, HSAs are nothing more than a scam. Fake health insurance that won't keep you from catastrophic debt in the event of catastrophic illness. But there's more. They might be stealing your money, too:

Thousands of people are learning that money they squirreled away in health savings accounts is gone. Many thought the money was sitting safely in banks. But now it appears it was stolen.

Federal investigators have released few details, but all the cases have one thing in common: a Chicago company called Canopy Financial.

Now critics are questioning whether more government oversight is needed for the accounts.

Surprise, surprise! The "free market" solution that Republicans love allows big banks to run roughshod over working families because there are few rules or oversight governing these Health Savings Accounts. And the Republican solution to our health care crisis? More of these, so banks can steal more of our money!

Republicans are also constantly criticizing the health care bills in Congress because they supposedly "slash" Medicare. (Never mind that the claims are untrue. The health care bills will not touch Medicare benefits, and in fact will improve the health care for seniors.) The "slashing" they're referring to comes primarily from the plan to cut Medicare Advantage, a program created by the Bush administration and run by private companies instead of the government that runs Medicare. The program costs 12% more. Why? Because private companies can't provide health care more efficiently than the government, so they need corporate welfare so they can make a profit.

But Republicans apparently love this program, and cutting off these corporate giveaways is akin to cutting health benefits for seniors. Well guess what? Premiums for these Medicare Advantage programs are going up as much as 14% next year:

Millions of seniors who signed up for popular private health plans through Medicare are facing sharp premium increases this year — another sign that spiraling costs are a problem even for those with solid insurance.

A study released Friday by a major consulting firm found that premiums for Medicare Advantage plans offering medical and prescription drug coverage jumped 14.2 percent on average in 2010, after an increase of only 5.2 percent the previous year. Some 8.5 million elderly and disabled Americans are in the plans, which provide more comprehensive coverage than traditional Medicare, often at lower cost.

…

Administration officials didn't dispute the Avalere study but sought to pin responsibility on the private insurers that participate in the program, a list that includes such industry giants as UnitedHealthcare and Aetna. Nonpartisan technical advisers to Congress say Medicare Advantage plans are being overpaid because of a flawed formula.

"The plans need to explain why these increases are necessary," said Medicare spokesman Peter Ashkenaz.

Eric Hammelman, a senior Avalere data analyst, said that after the government cut payments to the plans last year, the insurers faced a choice. "They could raise premiums or lower benefits, and what most of them decided to do was raise premiums," he said.

An insurance industry spokesman said Medicare Advantage cuts in the Democratic health care bills will lead to higher premiums and reduced benefits. "That will put at risk the health security of seniors in the program, breaking the promise that those who like their coverage can keep it," said Robert Zirkelbach of America's Health Insurance Plans.

Of course the industry would say that, but that's not the whole story. These private companies chose to put their profits over their customers and raise their rates because they can't compete. And this is the program Republicans want to save as opposed to taking that 12% corporate subsidy and putting that wasted money to good use by, say, plugging the donut hole, something the Democratic bills do.

As Republicans head into this summit to present their ideas, today's news is just another reminder that the ideas really just don't work.

Today, Secretary Sebelius and the Department of Health and Human Services released a report on health insurance company rate increases in the wake of the outrage over Anthem Blue Cross's 39% increases in California. The report makes clear what those of us who've been following the health care debate have known for years: California's rate increases aren't unique.

The HHS report highlights similar rate increases in other states:

Anthem Blue Cross isn’t alone in insisting on premium hikes. Anthem of Connecticut requested an increase of 24 percent last year, which was rejected by the state.³ Anthem in Maine had an 18.5-percent premium increase rejected by the state last year as being “excessive and unfairly discriminatory”⁴ – but is now requesting a 23-percent increase this year.⁵

In 2009, Blue Cross/Blue Shield of Michigan requested approval for premium increases of 56 percent for plans sold on the individual market.⁶ Regency Blue Cross Blue Shield of Oregon requested a 20-percent premium increase.⁷ UnitedHealth, Tufts, and Blue Cross requested 13- to 16-percent rate increases in Rhode Island.⁸ And rates for some individual health plans in Washington increased by up to 40 percent until Washington State imposed stiffer premium regulations.⁹

Leading experts have predicted that, without reform, these increases will continue, and the federal government and most states don’t have the legal authority to block or reduce health insurance rate increases.¹⁰

Of course, this comes at the same time that the parent companies of these insurers are making record profits.

The insurance companies, of course, will claim that these rate increases are justified by rising costs. They're dead wrong. More from the report:

WellPoint and others claim that the premium increases are necessary given the rise in health care costs. While rising health care costs is a known problem with our broken health care system, some of the premium increases requested by insurance companies are 5 to 10 times larger than the growth rate in national health expenditures.¹¹ All the while, insurance companies and their CEOs continue to thrive.

Recent economic data show that profits for the ten largest insurance companies increased 250 percent between 2000 and 2009, ten times faster than inflation.¹²,¹³ Last year, as working families struggled with rising health care costs and a recession, the five largest health insurance companies – WellPoint, UnitedHealth Group, Cigna, Aetna, and Humana – took in combined profits of $12.2 billion, up 56 percent over 2008.¹⁴ These health insurance companies’ profits grew even as nominal GDP decreased by 1 percent over this same time period.¹⁵ WellPoint accumulated more than $2.7 billion in profits in the most recent quarter alone.¹⁶

On a call today with reporters, Secretary Sebelius explained why insurance companies get away with rate increases like this:

Insurance companies are often responsible to shareholders as well as policy holders. And when you sell insurance, you make more money by insuring people who don't get sick rather than people who do get sick.

A lot of these people on these plans have no choice other choice. They can either pay the rate increases or drop coverage.

Later in the day on another call with reporters, Congressman Earl Blumenauer joined small business owners from the Main Street Alliance to talk about their rate increases, further driving home the point that these kinds of rate hikes are commonplace.

On the call, business owners like Kelly Conklin from Bloomfield, NJ said health insurance rates had gone up for them as much as 124%. Conklin said:

My employees will have to decide if they want to continue getting coverage and pay their own way or drop coverage and take their chances.

These premium increases stifle business and prevent employees from contributing to economic growth because all of their wages go towards health care. We're at end of our rope. We can't afford to let this opportunity for reform slip away. We need to finish the job with the things the Main Street Alliance is fighting for - competition, transparency, and a public option.

Congressman Blumenauer responded:

It's frustrating for me to hear these stories. Small business is paying disproportionate amount of the health care burden. Hearing of businesses spending 20% of payroll on health care isn't uncommon.

It doesn't have to be this way. We spend more on health care than any nation in the world. A few in America get the best health care, for the average American, we get worse results. We are sick more often, stay sick longer, die sooner, and our families and businesses suffer.

A few months ago, I introduced a bill to terminate health insurance for Congress until health reform is enacted. If they had to personally experience the tender mercies of the health care market - the gaps in coverage, the increasing premiums premiums, denials of care - I think we would enact reform in a matter of weeks!

Hopefully the House will use reconciliation, otherwise known as the majority vote process, to clean up the Senate bill and send it back to them for a vote. Then we would approve the remainder of the Senate bill.

Double digit rate hikes are the norm in America's health care system today. They will only get worse if reform isn't finished and finished right. Of course, the insurance industry thinks Secretary Sebelius is "vilifying" them, with AHIP - the main insurance industry lobby - releasing a statement today saying how much they think we need health reform. This is while they're actively funneling money to the Chamber of Commerce to run ads trying to kill reform.

Sorry insurance companies, but we've known all along that you want to preserve the status quo so you can keep raking in your outrageous profits while the rest of the country struggles to get out of a deep recession. It's up to Congress to fix this broken system and put the insurance companies in their place. Which means finishing reform right and getting it done now.

A congressional hearing next week into the proposed 39 percent rate increase in California by health insurance giant WellPoint could breathe new life into health care reform efforts on Capitol Hill, especially if lawmakers broaden their investigation into the outrageous rate increases other insurers are also demanding from coast to coast.

WellPoint found itself in Congressional investigators' crosshairs after the California Department of Insurance challenged the company's planned increase in the rates it charges its customers who cannot get coverage through the workplace, but have to go it alone in what is called the individual market.

read more

WellPoint, the mega-insurance-corporation that owns Anthem Blue Cross, decided to delay Anthem's widely reported rate increases in California, which were as high as 39% for some customers. This comes on the heels of the news that the insurance industry as a whole - and WellPoint in particular - posted record profits last year while simultaneously cutting millions of customers from their rolls.

The delay in the rate increases may end up being just that - a delay:

State Insurance Commissioner Steve Poizner said Saturday that he secured an agreement with Anthem to postpone for at least two months the increases that had been set to take effect March 1 for many of the estimated 800,000 policyholders.

The delay, he said, would give state regulators time to have newly hired outside health-insurance actuarial experts analyze Anthem's rates to make sure they don't violate California law.

But it could give WellPoint time to think about whether the rate increase is worth the tradeoff. Since the news broke, WellPoint stock has fallen 3.8%, while the S&P was up 1% in the same time period.

Of course, you can't always rely on a big news story to delay or perhaps reverse rate increases like this. Insurance companies have been increasing customer rates by double digits for years now. Anthem's rate increase wasn't noteworthy for the breadth and depth of the changes, only in the attention it got from the media, state insurance commissioners, Members of Congress, and the Obama administration. Not every rate increase will get this attention. As Ezra Klein points out, that's why we need health reform:

The insured can't depend on someone in the White House's communications shop noticing when an insurer tries to screw its customers. What we need is an actual policy standing between the insured and the grim incentives of their insurers. That's what health-care reform is meant to be, and the Anthem saga is a good example of how it would work.

Ezra goes on to explain what's in the Senate bill that would help stop these things from happening. First, insurers would have to publicly justify the rate increases to the people who run the Exchange. If they couldn't justify the increase, or the administrators of the Exchange didn't accept the justification, the entire company could be barred from offering insurance through the Exchange. Second, the bill would bar insurers from denying care based on pre-existing conditions and the like, changing the incentives for insurers so that they're no longer weighted towards raising rates and dropping customers.

Of course, there's much more to the Senate bill that would help this situation, and even more in the House bill.

For example, the Senate bill would require that insurance companies spend 80% of customer premiums on health care instead of profits and "administrative costs" for individual plans and 85% for large group plans. The House bill mandates 85% across the board. For plans like Anthem's - individual insurance policies that are most subject to the gouging of insurance companies and typically have loss ratios that are much lower - that means much more premium dollars will be spent on care.

In the House bill, the Exchange would be run nationally, which means the administrator would have more power to keep insurance companies in check and customers wouldn't have to rely on their state's insurance commissioner or Exchange administrator - very good in some states, very corrupt in others - to protect them from rate increases.

And the House bill has a public health insurance option as one choice in the Exchange. Via competition, it would act to keep rates down among all plans.

But for now, in a world without health reform, none of these things are happening. In fact, WellPoint's Board of Directors just cashed out just ahead of the company's stock price-killing rate increases:

Three WellPoint board members have collected a combined $625,517 in gains from stock options in the Indianapolis-based health insurance giant as the company has faced national media scrutiny and barbs from the Obama administration over premium increases.

…

With $3.02 million in total insider sales Feb. 1-9, this month already ranks as the fourth-highest tally of insider selling at WellPoint since the start of 2009, according to insider trading data tracked by Thomson Financial. December was the top month during that period, with WellPoint officers and directors selling a combined $12 million.

In a world without reform, WellPoint's customers - working families, sick people struggling to find insurance - face 39% rate increases while the Board of Directors, many of whom are former politicians or other well-connected people, makes hundreds of thousands just days before their stock price takes a hit.

All the more reason we must get health reform done and get it done right.